Oct sees 10% jump in GST collection
GST revenue rose to ₹1,05,155 cr in Oct from ₹95,480 cr in Sept, as per data
THIS WILL PROPORTIONATELY REDUCE THE AMOUNT REQUIRED FOR COMPENSATING STATES, AN OFFICIAL SAID
NEW DELHI: Revenue from the Goods and Services Tax (GST) in October exceeded Rs 1 lakh crore for the first time in eight months, increasing 10% from a year ago in the second consecutive monthly rise on the back of festive consumption, indicating a turnaround in the economy that shrank by a record in the three months ended June because of the Covid-19 pandemic and lockdown .
GST revenue last month amounted to ₹1,05,155 crore, the finance ministry said on Sunday. HT reported on October 24 that GST collections, a barometer of economic health, would surpass ₹1 lakh crore in the month.
Revenue from the indirect tax grew in September by a modest 4% year-on-year to ₹95,480 crore after seven months of decline.
“During the month, revenues from import of goods was 9% higher and the revenues from domestic transaction are 11% higher than the revenues from these sources during the same month last year,” a finance ministry statement said.
It’s good news for Asia’s third largest economy, which contracted by 23.9% in the financial year’s first quarter because of the Covid-19 outbreak and the ensuing 68-day hard lockdown that shut production at most factories, closed business establishments, caused the exodus of migrant workers from the cities back to their homes in rural India and confined citizens indoors. Lockdown restrictions have been gradually eased.
Improved collection will proportionately reduce the amount required for compensating states for a shortfall in their share of GST revenue, a finance ministry official said, requesting anonymity. The Union government is borrowing ₹1.1 lakh crore on behalf of states to c.ompensate them for a part of the estimated ₹2.35 lakh shortfall this fiscal year in their share of revenue from GST because of a steep fall in revenue.
With Unlock gathering pace, economic activity has begun to revive, said MS Mani, a partner at consulting firm Deloitte India.
“Collections which are higher by nearly ₹10,000 crore compared to the same period in 2019 indicate the definitive revival of consumption and festival spends across the economy...,” he said.
Revenue from the Goods and Services Tax (GST) in October exceeded ₹1 lakh crore for the first time in eight months, increasing 10% from a year ago in the second consecutive monthly rise on the back of festive consumption, indicating a turnaround in the economy that shrank by a record in the three months ended June because of the Covid-19 pandemic and lockdown .
GST revenue last month amounted to ₹1,05,155 crore, the finance ministry said on Sunday. HT reported on October 24 that GST collections, a barometer of economic health, would surpass ₹1 lakh crore in the month. Revenue from indirect taxes grew in September by a modest 4% year-on-year (y-o-y) to ₹95,480 crore after seven months of decline.
“During the month, revenues from import of goods was 9% higher and the revenues from domestic transaction are 11% higher than the revenues from these sources during the same month last year,” a finance ministry statement said.
It’s good news for Asia’s third largest economy, which contracted by 23.9% in the financial year’s first quarter because of the Covid-19 outbreak and the ensuing 68-day
lockdown. Restrictions have been gradually eased.
Improved collection will proportionately reduce the amount required for compensating states for a shortfall in their share of GST revenue, a finance ministry official said, requesting anonymity. The Union government is borrowing ₹1.1 lakh crore on behalf of states to compensate them for a part of the estimated ₹2.35 lakh crore shortfall this fiscal year in their share of revenue from GST due to a steep fall in revenue.
With Unlock gathering pace, economic activity has begun to revive, said MS Mani, a partner at consulting firm Deloitte India. “Collections which are higher by nearly ₹10,000 crore compared to the same period in 2019 indicate the definitive revival of consumption and festival spends across the economy. Continuance of this trend will help in narrowing the fiscal deficit for FY 2021 and will go a long way in reviving business confidence across sectors as the impact of the Unlockdown process across states gets translated into GST collection figures,” he said.
As a result of the lockdown, GST revenue declined by 8.4% y-o-y to ₹97,597 crore in March, and by 72% to ₹32,172 crore in April. In May, revenue from the indirect tax dropped 38% on an annual basis to ₹62,151 crore. The pace of the decline slowed to 9% in June, when ₹90,917 crore of revenue came in, thanks to receipts from the lockdown backlog. Revenue again contracted sharply year-on-year by 14.3% in July to ₹87,422 crore and 13% in August to ₹86,449 crore. GST revenue posted the first increase after seven months in September, growing by 4% year-on-year to ₹95,480 crore.
Mani said the comparison of GST collections in major states with the same period last year showed very clear signs of an increase in consumption and festive buying. “If the trend of the past two months continues, then it would indicate that a sustained economic revival is underway,” he added.